Ethanol Drops as Production Climbs to Highest Since December

Source: By Mario Parker, Bloomberg • Posted: Thursday, April 17, 2014

Ethanol declined in Chicago for a fourth day following a government report that production last week climbed to the highest level since December.

Futures fell 4.1 percent after the U.S. Energy Information Administration said output increased 4.8 percent to 939,000 barrels a day, the steepest gain since Sept. 27.

“The trade is really keying on the production number; it was big,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa.

Denatured ethanol for May delivery fell 9.3 cents to settle at $2.172 a gallon on the Chicago Board of Trade, the lowest since Feb. 24. Prices have gained 14 percent this year.

Gasoline for May delivery slid 0.16 cent to $3.0405 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

Ethanol’s discount to the motor fuel expanded 9.14 cents to 86.85 cents.

Stockpiles slumped 2.8 percent to 16 million barrels, the first weekly decline since March 14, according to the EIA, the Energy Department’s statistical arm.

Corn for May delivery sank 6.25 cents, or 1.2 percent, to $4.975 a bushel in Chicago.

In cash market trading, ethanol fell 35.5 cents to $2.345 a gallon in Chicago, 32 cents to $2.85 on the West Coast and 5 cents to $2.45 on the Gulf Coast, data compiled by Bloomberg show. InNew York, the biofuel climbed 2.5 cents to $2.475 a gallon.

Corn-based ethanol Renewable Identification Numbers for 2014, used by the government and refiners to track consumption targets, were at 42 cents, while 2013 RINs were at 44 cents, data compiled by Bloomberg show.